MANEKJI MOTA CHARITABLE TRUST, MUMBAI V. DIT (E), MUMBAI

ITA 1997/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3592 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-12-2014
• Assessment Year: 2013-2014
• Appeal Filed On: 13-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Charitable institution
• Section: 12A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO . 1997 / MUM/20 1 3 ( / ASSESSMENT YEAR : NA ) MANEKJI MOTAL CHARITABLE TRUST, 20, KAPADIA CHAMBERS, 2 ND FLOOR, 51, DEVJI RATANSHI MARG, MASJID _EAST, MUMBAI - 400009 / VS. DIRECTOR OF INCOME (EXEMPTION), 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN NO. : AACTM9481H / APPELLANT BY: S HRI SANJAY R PARIKH / RESPONDENT BY SHRI N P SINGH / DATE OF HEARING : 4 .8.2016 / DATE OF PRONOUNCEMENT : 22. 8 .2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTION), MUMBAI DATE D 21.2.2013. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUND S OF APPEAL IS AGAINST THE REJECTION OF REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AND REFERRED TO AS THE ACT) BY THE DIRECTOR OF INCOME TAX (EXEMPTION). THE DIRECTOR OF INCOME TAX (EXEMPTION) REJECTED THE ITA NO . 1997 / M/1 3 2 APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12A ON TWO GROUNDS FIRST THAT THE TRUST DID NOT PROVIDE FOR DISSOLUTION CLAUSE IN THE DEED OF TRUST AND THEREFORE THE APPELLANT COULD NOT BE SAID TO HAV E VALIDLY CONSTITUTED PUBLIC TRUST AND SECOND THAT THE APPLICANT TRUST INCURRED A SUM OF RS. 3,92,830/ - ON RELIGIOUS ACTIVITIES FOR THE PURPOSE OF POOJA AND MAKING DONATIONS FOR RELIGIOUS PURPOSES WHICH WORKED OUT TO 29% OF ITS GROSS RECEIPT OF RS.1 3,55,090/ - AND THUS, THE ACTIVITIES CARRIED BY THE APPLICANT WERE NOT IN CONSONANCE WITH THE OBJECT S SET OUT IN THE TRUST DEED AND FINALLY THE LD. DIRECTOR (EX E M PTION ) HELD THAT HE WAS NOT SATISFIED WITH THE GENUIN ENESS OF THE ACTIVITIES OF THE TRUST WH ICH WAS A PRE - CONDITION FOR THE REGISTRATION AND ACCORDINGLY REJECTED REGISTRATION OF THE APPLICATION TRUST. 3 . THE LD. AR VEHEMENTLY ARGUED THAT THE DIRECTOR (EX E M PTION ) HAS WRONGLY REJECTED THE APPLICATION FOR REGISTRATION U/S 12A OF THE ASSESSEE O N TWO REASONS I.E. ABSENCE OF DISSOLUTION CLAUSE IN THE TRUST DEED AND THE APPLICATION OF 29% OF ITS GROSS RECEIPT FOR MAKING DONATION S TO VARIOUS TEMPLES AND FOR P ERFORMING POOJA. THE LD. AR SUBMITTED THAT SO FAR AS THE ABSENCE OF DISSOLUTION CLAU SE MENTIONED IN THE TRUST DEED OF THE APPELLANT TRUST IS CONCERNED, THE LD. A R RELIED ON THE CASE OF CIT V/S TAPAGACHHA SANGH MOTA (2015) 59 TAXMAN.204 (GUJ) (II)GEETA LALWANI FOUNDATION V/S DIRECTOR OF INCOME TAX EXM) IN ITA NO.3566/MUM/2013 AND AS REGARD THE SECOND REASON CITED FOR REJECTION U/S 12A, THE LD.AR STRONGLY RELIED ON THE DECISION OF CHENNAI TRIBUNAL IN THE CASE OF LIFE SHINES EDUCATIONAL AND ITA NO . 1997 / M/1 3 3 CHARITABLE TRUST V/S ACIT (2015) 39 ITR (TRIB) 291 (CHENNAI) AND THUS SUBMITTED THAT THE REGISTRATION WAS DENIED WITHOUT ANY COGENT REASONS . 4 . ON THE OTHER HAND, THE LD. DR STRONGLY RELIED ON THE ORDER OF DIRECTOR (EX E M PTIONS ) AND PRAYED FOR UPHOLDING THE SAME. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED THE MAT ERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAWS RELIED UPON BY THE PARTIES . WE FIND THAT IN THE PRESENT CASE BEFORE US THE REGISTRATION WAS DENIED AND REJECTED BY THE LD. DIRECTOR (E X E M PTION ) FOR TWO REASONS (I) FOR ABSENCE O F DISSOLUTION CLAUSE IN THE TRUST DEED AND (II) THE APPLICATION OF INCOME OF THE TRUST TO THE EXTENT OF 29% FOR VARIOUS RELIGIOUS ACTIVITIES BY MAKING DONATION S TO THE TEMPLES AND FOR PERFORMING POOJAS IN AY 2001 1 - 12. WE ARE IN AGREEMENT WITH THE LD. AR THAT THE APPLICATION OF THE TRUST CANNOT BE REJECTED ON THESE FLIMSY GROUNDS. MOREOVER THE CASE OF ASSESSEE FIND SUPPORT FROM THE DECISION OF TAPAGACHHA SANGH MOTA (SUPRA), WHEREIN THE HONBLE HIGH COURT HAS HELD THAT REGISTRATION U/S 12A CANNOT BE DEN IED ON THE GROUND THAT DEED OF TRUST DOES NOT CONTAIN DISSOLUTION CLAUSE . IN THE CASE OF GEETA LALWANI FOUNDATION (SUPRA) , THE COORDINATE BENCH HAS HELD AS UNDER : 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS CITED JUDGMENTS OF THE HIGHER JUDICIARY AND THE RELEVANT MATERIAL PLACED BEFORE US. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AU THORITIES, WE FIND THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY (SUPRA) IS DECIDED ON THE FACTS OF THE SAID TRUST GENERATING THE INCOME AND NOT UNDERTAKING ANY CHARITABLE WORK. ITA NO . 1997 / M/1 3 4 THUS, THE SAME IS DISTINGUISHABL E. IN THE PRESENT CASE, ASSESSEE IS YET TO COMMENCE ITS ACTIVITIES AND THEREFORE, THE ASSESSEE CANNOT BE DESCRIBED AS UNDERTAKING THE ACTIVITIES FOR GENERATING INCOME ONLY. REGARDING THE DISSOLUTION CLAUSE NOTING IS BROUGHT ON RECORD EVEN BEFORE US THAT TH E BOMBAY PUBLIC TRUSTS ACT, 1950 MANDATES FOR INCORPORATION OF MANDATORY CLAUSE OF DISSOLUTION OF ANY IRREVOCABLE TRUST. THEREFORE, IN OUR OPINION, THE DECISION OF THE DIT (E) REJECTING THE REGISTRATION U/S 12A IS REQUIRED TO BE REVERSED. ACCORDINGLY, GROU NDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. SO FAR AS THE SECOND OBJECTION BY THE DIRECTOR (EX E M PTION ) FOR REJECTION OF REGISTRATION OF TRUST U/S 12A IS CONCERNED , WE ARE OF THE OPINION THAT THE APPLICATION OF INCOME OF THE TRUST HAS TO BE SEEN AT THE T IME OF ASSESSMENT AND IT IS PREMATURE TO EXAMINE THE SAID ISSUE AT THE TIME OF GRANT OF REGISTRATION U/S 12A OF THE ACT. THE CASE OF THE ASSESSEE IS SUPPORT ED BY A DECISION OF THE TRIBUNAL LIFE SHINES EDUCATIONAL AND CHARITABLE TRUST VS ACIT (SUPRA) IN WHICH IT IS HELD THAT THE ISSUE OF APPLICATION OF INCOME OR THE ACTIVITIES CARRIED ON WERE TO BE CONSIDERED AT AN APPROPRIATE PROCEEDINGS I.E. THE ASSESSMENT PROCEEDINGS AND NOT AT THE TIME OF GRANTING REGISTRATION U/S 12A. IN VIEW OF THE RATIO LAID DOWN IN THE DECISIONS CITED (SUPRA), WE FIND THAT THE ORDER OF LD.CIT(A) IS WRONG AND CANNOT BE SUSTAINED AS REGISTRATION HAS BEEN DENIED FOR NO VALID REASONS . W E , THEREFORE FOLLOWING THE RATIO LAID DOWN BY THE ABOVE SAID DECISIONS , SET ASIDE THE ORDER OF LD.DIRECTOR (EX E M PTION ) WITH A DIRECT TO GRANT REGISTRATION TO THE ASSESSEE U/S 12A OF THE ACT . ITA NO . 1997 / M/1 3 5 7 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND AUG , 2016 . 22 ND AUG, 2016 SD/ - SD/ - ( SHAILENDRA KUMAR YADAV ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 22 ND AUG , 2016 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, / / TRUE COPY / / (ASSTT. REGISTRAR) , /ITAT, MUMBAI ITA NO . 1997 / M/1 3 6 DATE INITIALS 1. DRAFT DICTATED ON 4 .8. 2016 SPS 2. DRAFT PLACED BEFORE AUTHOR 17.8 .2016 SPS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM 5. APPROVED DRAFT COMES TO THE SR. PS SPS 6. KEPT FOR PRONOUNCEMENT ON SPS 7. FILE SENT TO THE BE NCH CLERK SPS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO A.R. 10. DATE OF DISPATCH OF ORDER